As a result of yesterday’s news, it appears that the overall stability of the Medicare Advantage market in 2014 will be greater than anticipated following the CMS Advance Notice and Draft Call Letter issued in February.
One of the key items that may have led to this decision may have been the way that Congress has handled the “Doc Fix” each year. Many news outlets reported last week that there were ongoing discussions trying to resolve how Medicare Advantage rates were being cut, while Congress was perpetually refusing to cut the rates paid to doctors through Original Medicare.
CMS actually addressed this item on the first page of their announcement letter (full text available on their website):
The basis for the Growth Percentage for 2014 has been changed to incorporate an assumption that Congress will act to prevent the scheduled 25-percent reduction in Medicare physician payment rates from occurring. The Office of the Actuary has been directed by the Secretary to use this assumption, on the grounds that it is a more reasonable expectation than the reduction required under the statutory “sustainable growth rate” (SGR) formula. Although the Office of the Actuary agrees that Congress is very likely to override the physician fee reduction, the assumption conflicts with the Office’s professional judgment that, as in all past years, the determination should be based on current law, not an assumed alternative.
Two good articles about this today can be found on the CNBC website and the Washington Post website.